Bjørn Lomborg: Wind Power is a Vanity Project

When it comes to assessing the costs, risks and benefits of environmental policy Bjørn Lomborg has always tried to provide balanced, detailed analysis supported by facts and evidence. The economic choices we make – about allocating scarce resources to unlimited wants – should – as Lomborg consistently points out – be made taking into account all of the costs weighed against properly measured benefits (see our post here).

When it comes to renewable energy policy, however, fundamental economic doctrine has been simply thrown to the wind.

The wind industry and its parasites tout spurious and unproven benefits in terms of CO2 emissions reductions – reductions which cannot and will never be delivered by a generation source delivered at crazy, random intervals that adds nothing to the entire Eastern Australian Grid hundreds of times each year – and which, therefore, requires 100% of its capacity to be backed up 100% of the time by fossil fuel sources (see our posts here and here).

Wherever there’s been any significant investment in wind power retail power prices have gone through the roof – witness Denmark, Germany and South Australia – which all jostle for the top spot on the table for the highest power prices in the world. See the table at page 11 in this paper: INTERNATIONAL-PRICE-COMPARISON-FOR-PUBLIC-RELEASE-19-MARCH-2012 – noting that the figures are from 2011 and SA’s retail power costs have risen significantly since then.

Bjørn continues his argument against the waste of wind energy in The Australian today.

Copenhagen’s wind plan is little more than a costly vanity project
Bjørn Lomborg
The Australian
23 July 2014

COPENHAGEN, Denmark’s capital, wants to be the world’s first CO2-neutral city by 2025. But, as many other well-meaning cities and countries have discovered, cutting CO2 significantly is more difficult than it seems, and may ­require quite a bit of creative ­accounting.

More surprisingly, Copenhagen’s politicians have confidently declared that cutting CO2 now will ultimately make the city and its citizens wealthier, with today’s expensive green-energy investments more than paying off when fossil-fuel prices rise. But how can deliberately limiting one’s options improve one’s prospects? These sound more like the arguments of green campaigners — and they are most likely wrong.

The first challenge that Copenhagen faces in reaching its zero-emissions goal is the lack of cost-effective options for some sources of CO2, particularly cars. Denmark already provides the world’s largest subsidy to electric cars by exempting them from its marginal 180 per cent car-registration tax. For the most popular electric car, the Nissan Leaf, this exemption is worth €63,000 ($90,000). Yet, just 1536 of Denmark’s 2.7 million cars are electric.

There is also the challenge inherent in wind-generated electricity: ensuring the city can run when the wind is not blowing. To address this, Copenhagen had to devise an electricity-generation strategy that enables it sometimes to run on coal-fired power, without creating net emissions.

The city’s plan is to build more than 100 wind turbines within the greater Copenhagen area and in the shallow waters around it. With a combined output of 360 megawatts, these turbines will more than cover Copenhagen’s electricity needs — and the surplus can be used to offset the city’s remaining CO2 emissions, including from the city’s millions of non-electric cars.

Copenhagen’s success thus depends on the surrounding areas not aiming for CO2 neutrality. After all, the whole accounting exercise works only if others are still using fossil fuels that Copenhagen’s unpredictable wind power can replace. In this sense, Copenhagen is hogging the chance to feel righteous.

The city’s political leaders promise that this strategy for attaining carbon neutrality “provides an overall positive economic picture and will lead to economic benefits for Copenhageners” based on the expectation that ­prices for conventional energy sources like coal, oil, and gas will rise in the coming years. But the often-heard justification for this assumption — that humanity is rapidly depleting these scarce ­resources — is inconsistent with real-world events, as innovation has effectively expanded oil, gas, and coal reserves to unprecedented levels in recent years.

Consider Copenhagen’s wind-turbine plan, the single largest ­expected source of savings. The total cost of construction and maintenance is projected to be $US919 million ($979m). Even assuming a very large carbon tax of €20 a tonne now (it is actually €5 a ton) rising to €50 a tonne in 2045, this would give a paltry $US142m that they would avoid in hypothetical CO2 taxes. They also estimate saving $US1038m from not buying fossil-fuel-generated ­electricity. The cost for all the wind ­turbines is $US919m. In total, the saving is $US142m + $US1038m – $US919m = $US261m.

While that sounds impressive, it depends on a huge 68 per cent increase in the price of fossil-fuel-produced electricity by 2030. And Copenhagen is not alone in making such assumptions; the UK’s Department of Energy and Climate Change estimates a 51 per cent price increase by 2030.

It is likely that these projections are unrealistic. Look at the long-term price trends of coal and gas, which power the vast majority of global electricity production. Despite a recent increase, real coal prices have been trending downward since the 1950s.

In the US, the shale-gas revolution, facilitated by the development of hydraulic fracturing (“fracking”), has brought prices to their lowest levels since natural gas gained prominence after the oil crises of the 1970s. With many more countries set to tap shale-gas reserves over the next decade, this downward trend will most likely continue, helping to lower the price of electricity generation ­further. That is why Aurora Energy Research recently projected a significant decline in electricity prices for the next three decades.

Fracking has also enabled the US to tap its large shale-oil reserves, making it the world’s largest petroleum producer. Citigroup estimates that, by 2020, oil will cost just $US75 a barrel, and the former head of international forecasting at the OECD suggests the number could be closer to $US50.

This is inconvenient for climate mandarins in the UK and Copenhagen alike, because it reduces clean energy’s allure. Even if fossil-fuel-powered electricity prices remain constant, Copenhagen’s wind turbines become a net drain. If Aurora’s forecast proves correct, the city’s wind project would become a huge failure, costing 50 per cent more than the saved electricity is worth.

Instead of allowing politicians to spend public money on feel-good climate projects based on distant, and unreliable, predictions, citizens should encourage them to invest in clean-energy research and development, with the goal of making renewables inexpensive enough to overcome fossil fuels in the market. Initiatives like Copenhagen’s, however wonderful they sound, are ultimately little more than costly vanity projects.The Australian

The same could be said for the ACT and Canberrians that are ‘”hogging the chance to feel righteous” with an aim for 90% renewables and to become a centre for “green” power. However – we all know that wind turbines run on subsidies not wind – and when the RET review findings are released – then the tide will strongly turn against intermittent wind energy and the investors for these vanity projects will disappear.

Comments

Over the past few years we’ve been badgered to cut our use of electricity, even encouraged to consider buying electric cars – electric cars – surely that means using more electricity!!
But that’s OK, because we won’t need cars.
All we’ll need to do is grow longer arms and swing from one turbine to another to get to destinations. Perhaps we could erect a pulley and cage system using the turbines as poles to get goods from one place to another – lots of jobs for people to operate them – yes I can see IWT’s will be able to be put to great use in the energy poverty world of tomorrow.